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Patrick Donahoe: Delivering Morale Amid USPS Cuts – BusinessWeek.

PRC Report: Shortfalls in Some Products, Services Cost USPS $1.7B In FY 2009 : PostalReporter News Blog.

I will be manning intelisent’s booth #422 at the upcoming National Postal Forum in Nashville.  From the Forum website:
“The National Postal Forum is the premier educational event/experience and tradeshow available to mail professionals today. Attend the National Postal Forum to get a complete education in the “Business of Mail.”

If your business or profession has anything to do with using mail, or any of the products and services available through the United States Postal Service… then this is the place you need to be!”

…which is a good summary.

If you will be in attendance, please be sure to stop by and say hello.  If you have any questions on MTAC, Intelligent Mail, OneCode Confirm, or OneCode ACS, I would be happy to help get you some answers.

I know how hard it is to be a CEO; I ran my own company for 20 years. There are so many balls in the air and too little time. It is difficult, if not impossible to take a deep dive in any area. There is a hidden cost that if you don’t know about, will cost your company significantly. It is the cost of shipping. Shipping can be easily masqueraded from your view.

I recently had a CEO tell me that she felt guilty because she was overcharging her customers on shipping. When I took a close look at what was happening in her company and showed her, she was shocked to learn that she was losing $100,000 a year.

Here is what happened.

Many businesses bill their customers for shipping; some even add shipping and handling charges. Most companies will invoice the UPS and FedEx published rates and believe that they are making a profit on shipping because their logistics manager has negotiated a discount with the carrier. This was her case and why she believed she was making a profit.

We looked at her financial statements–the go to place where a CEO judges how the company is doing. On her income statement, there was a revenue line for shipping and it was named, shipping (recouped). The $200,000 listed looked very positive. CEOs love the top line.

I inquired what about this and she told me that it was the profit that they made on shipping. On further examination, we discovered that it was the total amount of revenue (not profit) for shipping that was invoiced. So, when a customer is invoiced for the goods, they also invoiced their customer for shipping and kept track of that amount in their chart of accounts. (This is a good practice; some companies don’t keep track of it separately and it is hidden from inspection.)

We then looked at where the payments to UPS were showing up on her income statement. Those costs were buried in the Cost of Goods Sold.

The total–$300,000.

“How is that possible?” she exclaimed.

She was losing over $100,000 a year on shipping and had no idea.

Stay tuned and you can learn what we discovered.

Washington, DC – The Postal Regulatory Commission today issued its Annual Compliance Determination (ACD) assessing the financial and service performance of the Postal Service in fiscal year (FY) 2009.

The Commission reported that 14 separate Postal Service products or services failed to cover their direct costs. Shortfalls in these products cost the Postal Service $1.7 billion dollars in FY 2009. Despite surpluses in other products such as First-Class Mail, the Postal Service lost $3.8 billion overall.

The report also identifies 30 instances of workshare discounts offered to large mailers where the discounts exceeded the savings to the Postal Service from the work performed by the mailers. Only in 17 of those instances could the Postal Service show that special circumstances justified the discount.

In issuing the report Chairman Ruth Y. Goldway said: “The ACD is the primary tool established by the Postal Accountability and Enhancement Act to ensure that the Postal Service is accountable for and transparent in its operations and service to the public. Unlike the Postal Service’s recently announced ten-year plan, the ACD reports on where the Postal Service is now and provides direction on what can be done in the short term to improve revenues, service levels and equity among rate payers.”

The ACD also reported on the Postal Service’s performance for delivery of each distinct class of mail, on consumer access to postal services, and customer satisfaction. The Postal Service had generally high performance levels for delivery of First-Class letters, but it performed well below target delivery levels for periodicals and packages. The Commission closely monitors the Postal Service’s performance and is pressing for the further development of measurement systems to assure speed of delivery and customer satisfaction.

The ACD also provides a detailed analysis of the Postal Service’s deteriorating financial situation. It is questionable whether the Service has maintained the capacity to provide fundamental postal services to the Nation as required by law in the future. Mail volume declines caused by the severe economic recession, combined with longer-term trends that replaced mail with digital communications led to reduced revenues in FY 2009. But losses were also caused by the requirement – in place since 2007 – that the Postal Service annually prepay over $5 billion for retiree healthcare benefits. The Postal Service ended FY 2009 with a $3.8 billion loss despite receiving $4 billion in temporary legislative relief from its requirement to prepay those benefits.

In the interests of clarity and accountability, Chairman Goldway filed a separate, concurring opinion choosing to use the term “not in compliance” to describe Postal Service results that did not meet provisions of the law. But she affirmed that all of the regulatory directives to the Postal Service detailed in the report were adopted unanimously by the Commission.

“The Commission will play an essential role in the upcoming public debate on the future of the Postal Service and the future of universal service to the Nation. Our agency will provide the platform for all interests and all issues to be considered fairly. We will put to use our expertise in evaluating postal costs, analyzing economic trends and bringing together all parties in the mailing community. The ACD is a fundamental tool in that process.”

Citing volume reductions, the USPS Office of the Inspector General says that the Postal Service should negotiate the elimination of the Christmas Overtime provision from its contract with the rural carriers union. The OIG report notes that over the last five years, December mail volumes (excluding parcels) have not been higher than other months. The OIG claims eliminating Christmas OT would save almost $3 million a year.
The chart shows the sharp drop in rural Christmas OT over the last several years. The report finds that reduction insufficient:

Christmas mail volume no longer supports the need for overtime and the associated NRLCA agreement supplemental Christmas overtime pay provision. Specifically, for five consecutive years, the December total delivered mail volume has been less than total delivered mail volume in the months of October, which had the highest mail volume for each of the years. In fact, during October 2004, total delivered mail volume was 5.4 percent higher than in December 2004. Four years later, the percentage difference had risen to approximately 10.5 percent.

The report admits that parcel volumes continue to spike in December, as shown on this chart:

The report suggests that “carriers could absorb any increase in parcel volume with their regular hours during the Christmas mailing season”, but provides no specific analysis to support that conclusion.

Rural Delivery Christmas Operations (Report Number DR-AR-10-003)

WASHINGTON, March 29– The national president of the 295,000-member National Association of Letter Carriers union (NALC) today criticized the U.S. Postal Service for arrogantly lobbying the general public with a misleading Internet web site to win approval of elimination of Saturday mail delivery despite the fact that Congress has shown little interest in such a move.

NALC President Fredric V. Rolando said the recently announced postal web site offers misleading information and planning guides for businesses and households regarding its plan to cut Saturday collection and mail delivery services.

“The arrogance of the Postal Service in this campaign to lobby the public to embrace five-day delivery as the answer to the Postal Service’s problem is astounding,” he said. “Given that Congress has shown very little interest in eliminating Saturday service and must approve any change, the Postal Service should focus its energies on real solutions, not risky and counterproductive service cuts.”

“The Postal Service should stand down on this reckless drive to end Saturday delivery,” Rolando added. “It would do more harm than good and it distracts us from the real solution, eliminating the crushing burden of a deeply flawed health benefits pre-funding policy.”

Rolando said the Postal Service’s move has forced the union to set up its own special web site that will provide the news media and general public with complete information on why the proposed change to five-day delivery is the wrong way to go to secure the long-term viability of the Postal Service.

The NALC special web site is http://nalc.org/postal/reform/index.html.

“What makes matters worse is that the Postal Service is sending a very confusing message to Congress,” Rolando said. “Just a week ago, Postmaster General John Potter told a Senate hearing that ‘we wouldn’t have to go to five-day delivery’ if Congress corrected the deeply flawed retiree health pre-funding policy.”

Rolando emphasized that the decision to reduce the level of service and slow mail service in America is not the Postal Service’s to make.

“Only the Congress can authorize this change. The website and the public relations campaign launched by the Postal Service appears designed to fool mailers and the American people that 5-day delivery is a done deal,” Rolando added.

He said the Postal Service took the outrageous step to launch the deceptive web site:

* Despite the fact that current law requires 6-day delivery and that Congress has not given its approval to the Postal Service’s proposal to cancel delivery and collections services on Saturday;
* Despite the fact that neither the Appropriations Committees nor the Postal Service’s oversight committees have even held hearings on the radical proposal to slow service and destroy 50,000 to 80,000 good jobs in the middle of a jobs crisis; and
* Despite the fact that the Postal Service had not yet filed for an advisory opinion from the Postal Regulatory Commission (PRC), which must hold hearings and subject the Postal Service’s questionable financial claims to democratic scrutiny.

Over the past few years, the NALC has led the drive to reform the pre-funding policy. That drive has been assisted in recent months by reports of the Postal Service’s own Inspector General that show that, measured accurately, the USPS surplus in the Civil Service Retirement Fund is large enough to fully fund future retiree health benefits. Fixing this problem would save the USPS at least $8 billion annually far more the speculative $3 billion annual savings the USPS claims it can get from reducing serve.

The 295,000-member NALC represents city delivery letter carriers in all 50 states and U.S. jurisdictions employed by the U.S. Postal Service, along with retired letter carriers.

WASHINGTON, D.C. – On March 25, 2010, Reps. Lynch, Chaffetz and Davis announced the reconvening of the Congressional Postal Caucus (CPC). Recently, the United States Postal Service unveiled a new business model to address unprecedented challenges largely due to the current economic environment and the rise in alternative means of communication. If nothing is done, the Postal Service expects to have an $8 billion shortfall by September 30, 2010 and suffer a net loss of $238 billion over the next 10 years.

Bringing the CPC back on line is intended to inspire and stimulate new ideas on how to put the Postal Service back on sound financial footing, assess the benefits and drawbacks of the proposals in Postal Service’s new business plan, and help Federal Policymakers tackle important postal matters such as 6‐day delivery. The caucus will allow for a productive exchange of information and insight among members and will make sure that Congress is well‐equipped to provide successful, permanent solutions to the Postal Service’s current and future issues. Collectively, the Members of the Congressional Postal Caucus will evaluate all viable options for securing a robust and vibrant Postal Service for years come.

According to CPC co‐chair, Stephen F. Lynch, “The Congressional Postal Caucus will ensure that Congress effectively addresses the most challenging and important postal issues of our time. I am excited to be involved with the restoration of this important organization and am looking forward to seeing the benefits that this collaborative effort will bring to the entire postal industry.”
“The U.S. Constitution grants Congress the authority to establish a postal system. In recent years, despite significant increases in productivity and reductions in work force, the US Postal System still faces significant fiscal challenges due to changes in consumer preferences. The Postal Caucus will serve as a forum to discuss proposals to restore fiscal stability to the USPS,” CPC co‐chair Jason Chaffetz said.

“The challenges facing the Postal Service reflect, in large part, deep going technical, economic and social changes now transforming our information infrastructure. The Congressional Postal Caucus will provide an indispensable forum for the development of public policy consistent with the all of the demands we place on the Postal Service of the 21st century,” advised Danny K. Davis, CPC co‐chair.

Even though the USPS has a good communication up at RIBBS on the subject, located here
http://foxyurl.com/QCw
there still seems to be a lot of confusion.

First and foremost – there are details in the document about a transition period through June 13, 2010.  Mailers who wish to continue to receive stamped postage statements can request an exception from their local postmaster and get those receipts.  This should make the transition a bit easier for mailers and mail owners.

Without an exception in place, and/or effective in June, there are two ways to show proof of mailing -

> Upon a customer’s request, acceptance personnel will provide PS Form 3607-R as a receipt for the mailing. Mailing Transaction Receipts must be hand-delivered to the mailer at the acceptance site. Receipts will be mailed only if the mailer provides a self-addressed stamped envelope.

> The PostalOne! system provides two proofs of the mailing transaction: The PS Form 3607-R, Mailing Transaction Receipt, is available only from the acceptance unit, and the final Postage Statement is available only through the Business Customer Gateway.

Have you made the transition yet?  How is it working out for you?  Comment this blog, or contact me privately.

WASHINGTON — When it comes to customer service, the U.S. Postal Service doesn’t rest on its laurels, so it recently launched a new measurement system designed to better understand customers’ total experience doing business with USPS at every level of the organization.

The Customer Experience Measurement (CEM) assesses end-to-end service with the Postal Service by allowing customers to provide ratings on four separate Postal Service experiences: receiving mail, sending mail, visiting the Post Office and contacting the Postal Service for assistance.

“Through added insights and actionable data, CEM will help the Postal Service more precisely identify customer needs across all channels and find new ways to provide greater customer service,” said Delores J. Killette, vice president and Consumer Advocate. “We will now be measuring and reporting on areas that really matter to our customers, and this information will help Postal Service managers take actions to improve service,” added Killette.

CEM replaces the measurement system that has been used since the early 1990s. The new system provides ongoing assessment of customer experiences through a series of diagnostic questions for both residential and business customers. The surveys are administered by an independent market research firm using both mail and online surveys. And, unlike the previous system, CEM allows customers to provide separate ratings for various kinds of experiences.

For the Postal Service’s first fiscal quarter, beginning Oct. 1, 2009, and ending Dec. 31, 2009,

86.2 percent of residential customers and 81.3 percent of small and medium business customers surveyed reported being “very satisfied” or “mostly satisfied” overall with doing business with the Postal Service. Other responses included:

Customers surveyed who were very/mostly satisfied

• Receiving mail: 89.7 percent for residential and 86.1 percent for small and medium business customers
• Sending mail: 88.8 percent for residential and 84.7 percent for small and medium business customers
• Post Office experience: 81.8 percent for residential and 76.6 percent for small and medium business customers
• Contact experience: 61.7 percent for residential and 51.4 percent for small and medium business customers

“These results set the baseline,” said Killette. “Now that we have more specific, actionable information, we will be able to target improvement initiatives and monitor progress.”

The Postal Service also maintained high levels of delivery service performance during the first part of its fiscal year. On-time national performance for single-piece First-Class Mail overnight was 95.8 percent, up slightly from the same period last year (95.6 percent). Other results were as follows:

• 92.3 percent on-time service performance for two-day single-piece First-Class Mail
• 89.1 percent on-time service performance for three-day single-piece First-Class Mail
• 83.8 percent on-time service performance for single-piece First-Class Mail international

Lifestyles and ways of doing business have changed dramatically over the past two decades. Better understanding of customer patterns is an important part of expanding access to Postal Service products, creating increased choices and convenience for customers.

Product registration in Florida is about to become a whole lot easier. Beginning April 17, Florida Alcohol Beverage & Tobacco (AB&T) will introduce a new online processing system that will shorten wait times for product registration approvals from 80 days to 2 minutes. This will significantly improve the process for wineries that distribute through traditional 3-tier channels in Florida. By eliminating a nearly three-month waiting period for product registration approvals, wineries will be able to get products to market quickly and accelerate sales. Florida does not currently require product registration for direct wine shipments.

In addition to online product registration, Florida is developing an electronic data submission system that will allow for online filing of alcohol reports. AB&T expects to begin accepting electronic reports in August of this year.

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The US Postal Service lost $611 million in February, bringing its fiscal year to date losses to $1.5 billion. The loss reflects the continuing impact of the so-called Retiree Health Benefit Trust Fund. Without the $643 million charge for March, the USPS would actually have shown a profit of $32 million for the month, and would be in the black by about $1.7 billion for the year.

Mail volume and revenue continued to slide. First class mail volume was down -9.4% compared with February 2009. Standard mail was up just slightly from last year, and the lower priced service accounted for 51% of total mail volume. Shipping service volumes were also up slightly. Overall revenue was down 3.5%.

USPS expenses were down by 3.9%. Salaries and benefits for employees were down by 6.9% from last year. In the first five months of the current fiscal year, the USPS has reduced expenses by $1.2 billion compared with the same period last year.

Full report (.pdf file)

USPS – Five-Day Delivery: Home.

WASHINGTON – The U.S. Postal Service Board of Governors today approved management’s request to move forward with its five-day delivery proposal and to file a request for an advisory opinion with the Postal Regulatory Commission (PRC) on March 30.

Postal Service Vice President Sam Pulcrano, who has been leading an internal five-day delivery task force, also told the Board at its meeting today that a website will be launched to provide customers with the details of the proposal. The website also will include a special section telling business mailers how to manage a change in delivery. The site can be accessed at http://www.usps.com/communications/five-daydelivery.

The five-day delivery proposal is a critical element of a larger plan, “Delivering the Future,” announced March 2. An action plan for the next decade, it presents a balanced approach needed to ensure a viable Postal Service for decades to come. The plan includes legislative and regulatory changes needed to give the Postal Service the flexibility to make necessary business decisions in a timely manner, including the prefunding of retiree health benefits, pricing and delivery frequency.

Two of the plan’s key proposals require action by the Congress: a restructuring of the payment schedule the Postal Service is required to make to prefund retiree health benefits and the elimination of existing statutory language mandating mail delivery six days a week.

Pulcrano told the Board that the five-day task force has spent the last several months seeking stakeholder input and refining the proposal to address mailer concerns. He also said extensive market research has been conducted and Postal Service findings have been consistent with most national polls that have shown that the American people would approve of a five-day delivery schedule if it would ensure a viable Postal Service well into the future.

A USA Today/Gallup poll conducted earlier in the month showed support for five-day delivery across all age groups from 58 percent in the 18-34 bracket to 73 percent among those 55 or older. An earlier Gallup poll showed that 69 percent of all Americans were agreeable to a five-day schedule if it would mean stable stamp prices and a Rasmussen poll showed 66 percent in favor if it would help the Postal Service maintain financial stability.

Pulcrano also highlighted the key elements of the proposal which will be detailed in the filing with the PRC: street delivery and blue box collections will be eliminated on Saturdays, Express Mail service will continue seven days a week, Post Offices currently open on Saturday will remain open, PO Box accessibility will continue and bulk mail and drop shipments will continue to be accepted at facilities that are currently open. If implemented, Pulcrano told the Board the estimated annual savings would be $3.1 billion.